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Cointegration in functional autoregressive processes

Massimo Franchi, Paolo Paruolo

arXiv 20 Dec 2017 · Econometrics

arXiv:1712.07522 · PDF · DOI · OpenAlex · Extracted main text

Abstract

This paper defines the class of $\mathcal{H}$-valued autoregressive (AR) processes with a unit root of finite type, where $\mathcal{H}$ is an infinite dimensional separable Hilbert space, and derives a generalization of the Granger-Johansen Representation Theorem valid for any integration order $d=1,2,\dots$. An existence theorem shows that the solution of an AR with a unit root of finite type is necessarily integrated of some finite integer $d$ and displays a common trends representation with a finite number of common stochastic trends of the type of (cumulated) bilateral random walks and an infinite dimensional cointegrating space. A characterization theorem clarifies the connections between the structure of the AR operators and $(i)$ the order of integration, $(ii)$ the structure of the attractor space and the cointegrating space, $(iii)$ the expression of the cointegrating relations, and $(iv)$ the Triangular representation of the process. Except for the fact that the number of cointegrating relations that are integrated of order 0 is infinite, the representation of $\mathcal{H}$-valued ARs with a unit root of finite type coincides with that of usual finite dimensional VARs, which corresponds to the special case $\mathcal{H}=\mathbb{R}^p$.

Citation extraction

29
references
149
in-text mentions
68
distinct cited
2
self-citations
13,748
main-text words

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Most heavily cited references

The works this paper leans on most, across its whole bibliography — not restricted to papers in our corpus. Ranked by composite intensity, which combines how often a work is mentioned, how many sections mention it, and how much of that falls in the main text rather than the appendix.

ReferenceIntensityMentionsSectionsMain text
1Beare, B. and W. Seo (2018) Representation of I(1) and I(2) autoregressive Hilbertian processes1.00094100%
2Beare, B., J. Seo, and W. Seo (2017) Cointegrated Linear Processes in Hilbert Space1.00094100%
3Chang, Y., C. Kim, and J. Park (2016) Nonstationarity in time series of state densities1.00093100%
4Johansen, S (1996) Likelihood-based Inference in Cointegrated Vector Auto-Regressive Models1.00093100%
5Hu, B. and J. Park (2016) Econometric Analysis of Functional Dynamics in the Presence of Persistence1.00085100%
6Bosq, D (2000) Linear Processes in Function Spaces0.9285480%
7Franchi, M. and P. Paruolo (2018) A general inversion theorem for cointegration self0.8746367%
8Chang, Y., B. Hu, and J. Park (2016) On the Error Correction Model for Functional Time Series with Unit Roots0.84333100%
9Gohberg, I., S. Goldberg, and M. Kaashoek (1990) Classes of linear operators, vol. 10.8307357%
10Gohberg, I., S. Goldberg, and M. Kaashoek (2003) Basic Classes of Linear Operators0.7639444%

Showing the top 10 of 68 scored citations.

Cited by, within the corpus

arXiv econ.EM papers that cite this one, ranked by how heavily they lean on it.

Citing paperIntensityMentionsSections
1Representation of I(1) and I(2) autoregressive Hilbertian processes1.00063
21cm Inference on common trends in functional time series0.64422
32102.106260.40511
4The general solution to an autoregressive law of motion0.40511
5Large-Scale Curve Time Series with Common Stochastic Trends0.40511
6Canonical correlation analysis of stochastic trends via functional approximation0.00011